Foreign Trade Policy

Transcription

1 Foreign Trade Policy 27th August st March 2014 w.e.f Government of India Ministry of Commerce and Industry Department of Commerce i

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3 TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II, SECTION-3, SUB SECTION (ii) GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF COMMERCE NOTIFICATION No. 1(RE-2010)/ NEW DELHI, DATED THE 23 rd August, 2010 In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act,1992 (No.22 of 1992) read with paragraph 1.2 of the Foreign Trade Policy, , the Central Government hereby notifies the Foreign Trade Policy, incorporating the Annual Supplement as updated on 23 rd August, 2010 and contained in Annexure to this notification. The policy shall come into force w.e.f. 23 rd August, This issues in Public interest. (P. K. Chaudhery) Director General of Foreign Trade and Additional Secretary to the Government of India (Issued from F.No. 01/ 94 / 180 / Foreign Trade Policy / AM11 / PC-4) iii

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7 CONTENTS CHAPTER SUBJECT Page GLOSSARY 1 1A LEGAL FRAMEWORK 5 1B SPECIAL FOCUS INITIATIVES 7 1C BOARD OF TRADE 15 2 GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS 17 3 PROMOTIONAL MEASURES 27 4 DUTY EXEMPTION / REMISSION SCHEMES 45 5 EXPORT PROMOTION CAPITAL GOODS SCHEME 59 6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO- TECHNOLOGY PARKS (BTPs) 65 7 SPECIAL ECONOMIC ZONES 81 7A FREE TRADE & WAREHOUSING ZONES 83 8 DEEMED EXPORTS 85 9 DEFINITIONS 91 vii

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9 GLOSSARY (ACRONYMS) Acronym ACC ACU AEZ ANF ARO ASIDE BG BIFR BOA BOT BRC BTP CBEC CCP CEA CEC CIF CIS CoD CoO CVD DA DoBT DC DEPB DFIA DFRC DGCI&S DGFT DIPP DoC DoE DoIT DoR DoT DTA EDI EEFC EFC EFT EH EHTP EIC EO Explanation Assistant Commissioner of Customs Asian Clearing Union Agri Export Zone Aayaat Niryaat Form Advance Release Order Assistance to States for Infrastructure Development of Exports Bank Guarantee Board of Industrial and Financial Reconstruction Board of Approval Board of Trade Bank Realisation Certificate Biotechnology Park Central Board of Excise and Customs Customs Clearance Permit Central Excise Authority Chartered Engineer Certificate Cost, Insurance & Freight Commonwealth of Independent States Cash on Delivery Certificate of Origin Countervailing Duty Document against Acceptance Department of Bio Technology Development Commissioner Duty Entitlement Passbook Scheme Duty Free Import Authorisation Duty Free Replenishment Certificate Director General, Commercial Intelligence & Statistics. Director General of Foreign Trade Department of Industrial Policy & Promotion Department of Commerce Department of Electronics Department of Information Technology Department of Revenue Department of Tourism Domestic Tariff Area Electronic Data Interchange Exchange Earners Foreign Currency Exim Facilitation Committee Electronic Fund Transfer Export House Electronic Hardware Technology Park Export Inspection Council Export Obligation 1

10 EOP Export Obligation Period EOU Export Oriented Unit EPC Export Promotion Council EPCG Export Promotion Capital Goods EPO Engineering Process Outsourcing FDI Foreign Direct Investment FIEO Federation of Indian Export Organisation FIRC Foreign Exchange Inward Remittance Certificate FMS Focus Market Scheme FOB Free On Board FPS Focus Product Scheme FT (D&R) Act Foreign Trade ( Development & Regulation) Act, 1992 (22 of 1992) FTDO Foreign Trade Development Officer FTP Foreign Trade Policy GATS General Agreement on Trade in Services GRC Grievance Redressal Committee HACCP Hazard Analysis and Critical Control Process HBP v1 Handbook of Procedures (Vol.1) HBP v2 Handbook of Procedures (Vol.2) ICD Inland Container Depot ICM Indian Commercial Mission IEC Importer Exporter Code ISO International Standards Organisation ITC (HS) Indian Trade Classification (Harmonised System) Classification for Export & Import Items, ITPO India Trade Promotion Organisation LoC Line of Credit LoI Letter of Intent LoP Letter of Permit LUT Legal Undertaking MAI Market Access Initiative MDA Market Development Assistance MEA Ministry of External Affairs MoD Ministry of Defence MoF Ministry of Finance NC Norms Committee NFE Net Foreign Exchange NOC No Objection Certificate PRC Policy Relaxation Committee PTH Premier Trading House PSU Public Sector Undertaking R&D Research and Development RA Regional Authority RBI Reserve Bank of India REP Replenishment RCMC Registration-cum-Membership Certificate RSCQC Regional Sub-Committee on Quality Complaints S/B Shipping Bill SEH Star Export House 2

11 SEI CMM SEZ SFIS SIA SION SSI STE STH STP TEE TH TRA TRQ VA VKGUY WHOGMP Software Engineers Institute s Capability Maturity Model Special Economic Zone Served from India Scheme Secretariat for Industrial Assistance Standard Input Output Norms Small Scale Industry State Trading Enterprise Star Trading House Software Technology Park Towns of Export Excellence Trading House Telegraphic Release Advice Tariff Rate Quota Value Addition Vishesh Krishi and Gram Udyog Yojana World Health Organisation Good Manufacturing Practices 3

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13 CHAPTER 1 A LEGAL FRAMEWORK Foreword 1.1 The Foreword spells out the broad framework Duration 1.2 The Foreign Trade Policy, (FTP), incorporating provisions relating to export and import of goods and services, shall come into force with effect from 27 th August, 2009 and shall remain in force upto 31 st March, 2014 unless otherwise specified. All exports and imports upto 26 th August 2009 shall be accordingly governed by the FTP The Foreign Trade Policy, , incorporating the Annual Supplement as updated on 23rd August, 2010 shall come into force with effect from 23rd August, 2010, unless otherwise specified. Amendment 1.3 Central Government reserves right in public interest to make any amendments by notification to this Policy in exercise of powers conferred by Section 5 of FT(D&R) Act. Transitional Arrangements 1.4 Authorisation issued before commencement of FTP shall continue to be valid for the purpose and duration for which such Authorisation was issued, unless otherwise stipulated. 1.5 In case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that shipment of export or import is made within original validity with respect to available balance and time period of an irrevocable commercial letter of credit, established before the date of imposition of such restriction. However for operationalizing such irrevocable commercial letter of credit, the applicant shall have to register the Letter of Credit and contract with the concerned RA within 15 days of the issue of any such restriction or regulation. 5

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15 CHAPTER 1 B SPECIAL FOCUS INITIATIVES Special Focus Initiatives 1B.1 With a view to continuously increasing our percentage share of global trade and expanding employment opportunities, certain special focus initiatives have been identified/continued for Market Diversification, Technological Upgradation, Support to status holders, Agriculture, Handlooms, Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries, Green products, Exports of products from North-East, Sports Goods and Toys sectors. Government of India shall make concerted efforts to promote exports in these sectors by specific sectoral strategies that shall be notified from time to time. Further Sectoral Initiatives in other sectors will also be announced from time to time. (i) Market Diversification During and , weaker demand in developed economies, triggered by falling asset prices and increased economic uncertainty had pulled down the growth of India s exports to developed countries. To insulate Indian exports from the decline in demand from developed countries, in this Policy, focus is on diversification of Indian exports to other markets, specially those located in Latin America, Africa, parts of Asia and Oceania. To achieve diversification of Indian exports, following initiatives have been taken under this Policy. (a) 27 new countries have been included within the ambit of Focus Market Scheme. (b) The incentives provided under Focus Market Scheme have been increased from 2.5% to 3%. (c) There has been a significant increase in the outlay under Market Linked Focus Product Scheme by inclusion of more markets and products. This ensures support for exports to all countries in Africa and Latin America, and major Asian markets like China and Japan. (ii) Technological Upgradation To usher in the next phase of export growth, India needs to move up in the value chain of export goods. This objective is 7

16 sought to be achieved by encouraging technological upgradation of our export sector. A number of initiatives have been taken in this Policy to focus on technological upgradation; such initiatives include: (a) (b) (c) (d) (e) (f) EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textile, plastics, handicrafts, chemicals and allied products and leather and leather products. This scheme is being expanded to cover more export product groups including marine products, sports goods, toys, rubber & rubber products, additional chemicals / allied products and additional engineering products. The scheme is also being extended upto The existing 3% EPCG Scheme has been considerably simplified, to ease its usage by the exporters. The facility of EPCG Scheme for Annual Requirement is being introduced to reduce documentation and transaction time. To encourage value added manufacture export, a minimum 15% value addition on imported inputs under Advance Authorisation Scheme has been stipulated. A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. Steps to encourage Project Exports shall be taken. (iii) Support to status holders The Government recognized Status Holders contribute approx. 60% of India s goods exports. To incentivise and encourage the status holders, as well as to encourage Technological upgradation of export production, additional duty credit 1% of the FOB value of past export shall be granted for specified product groups including leather, specific sub-sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for 8

17 import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition. The status holder incentive scrip scheme is being expanded to cover more export product groups including marine products, sports goods, toys, specified chemicals and allied products and additional engineering products. The scheme is also being extended upto (iv) Agriculture and Village Industry (a) Vishesh Krishi and Gram Udyog Yojana. (b) Capital goods imported under EPCG will be permitted to be installed anywhere in AEZ. (c) Import of restricted items, such as panels, are allowed under various export promotion schemes. (d) Import of inputs such as pesticides are permitted under Advance Authorisation for agro exports. (e) New towns of export excellence with a threshold limit of Rs 150 crore shall be notified. (f) Additional flexibility for agri-infra scrip by way of limited transferability to other status holders and the units in Food Parks allowed. (v) Handlooms (a) 2% bonus benefits under focus product scheme. (b) Specific funds are earmarked under MAI / MDA Schemes for promoting handloom exports. (c) Duty free import entitlement of specified trimmings and embellishments is 5% of FOB value of exports during previous financial year. Handloom made-ups have also been included for the entitlement. (d) Duty free import entitlement of hand knotted carpet samples is 1% of FOB value of exports during previous financial year. (e) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted. 9

18 (f) New towns of export excellence with a threshold limit of Rs 150 crore shall be notified. (g) Machinery and equipment for effluent treatment plants is exempt from customs duty. (vi) Handicrafts (a) Duty free import entitlement of tools, trimmings and embellishments is 5% of FOB value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers. (b) Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable. (c) Specific funds are earmarked under MAI & MDA Schemes for promoting Handicraft exports. (d) CVD is exempted on duty free import of trimmings, embellishments and consumables. (e) New towns of export excellence with a reduced threshold limit of Rs 150 crore shall be notified. (f) Machinery and equipment for effluent treatment plants are exempt from customs duty. (g) All handicraft exports would be treated as special Focus products and entitled to higher incentives. (h) In addition to above, 2% bonus benefits under Focus Product Scheme for Handicraft exports. (vii) Gems & Jewellery (a) Import of gold of 8k and above is allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content. (b) Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of 10

19 Consumables, Tools and additional items allowed for: 1. Jewellery made out of: (a) Precious metals (other than Gold & Platinum) 2% (b) Gold and Platinum 1% (c ) Rhodium finished Silver 3% 2. Cut and Polished Diamonds 1% (c) Duty free import entitlement of commercial samples shall be Rs. 300,000. (d) Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports. (e) Import of Diamonds on consignment basis for Certification / Grading & re-export by the authorized offices / agencies of Gemological Institute of America (GIA) in India or other approved agencies will be permitted. (f) Personal carriage of Gems & Jewellery products in case of holding / participating in overseas exhibitions increased to US$ 5 million and to US$ 1 million in case of export promotion tours. (g) Extension in number of days for re-import of unsold items in case of participation in an exhibition in USA, increased to 90 days. (h) In an endeavour to make India a diamond international trading hub, it is planned to establish Diamond Bourse(s). (viii) Leather and Footwear (a) Additional 2% bonus benefits under Focus Product Scheme. (b) Finished Leather exports to be incentivized under Focus Product Scheme. (c) Duty free import entitlement of specified items is 3% of FOB value of exports of leather garments during preceding financial year. (d) Duty free entitlement for import of trimmings, embellishments and footwear components for 11

20 footwear (leather as well as synthetic), gloves, travel bags and handbags is 3% of FOB value of exports of previous financial year. Such entitlement shall also cover packing material, such as printed and nonprinted shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear. (e) Machinery and equipment for Effluent Treatment Plants shall be exempted from basic customs duty. (f) Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted. (g) CVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No 21/2002 dated (h) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS). (i) Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse without payment of export duty. (ix) Marine Sector (a) Imports for technological upgradation under EPCG in fisheries sector (except fishing trawlers, ships, boats and other similar items) exempted from maintaining average export obligation. (b) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of 1% of FOB value of preceding financial year s export. (c) To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fish for tuna fishing at Nil duty. (d) A self removal procedure for clearance of seafood waste is applicable subject to prescribed wastage norms. (e) Marine products are incentivized at special higher rate under VKGUY scheme. (f) Marine sector included for benefits under zero duty EPCG scheme. 12

21 (x) Electronics and IT Hardware Manufacturing Industries (a) Export of electronic goods to be incentivized under Focus Product Scheme. (b) Expeditious clearance of approvals required from DGFT, shall be ensured. (c) Exporters /Associations would be entitled to utilize MAI & MDA Schemes for promoting Electronics and IT Hardware Manufacturing industries exports. (d) Electronics Sector included for benefits under SHIS scheme. (xi) Sports Goods and Toys (a) Duty free import of specified specialised inputs allowed to the extent of 3% of FOB value of preceding financial year s export. (b) Sports goods and toys shall be treated as a Priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI / MDA Scheme for promoting exports from this sector. (c) Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT. (d) Sports Goods and Toys are treated as special focus products and entitled to higher incentives. (e) In addition to above, 2% bonus benefits under Focus Product Scheme for Sports Goods & Toys. (f) Sports goods & Toys included for benefits under zero duty EPCG and SHIS schemes. (xii) Green products and technologies India aims to become a hub for production and export of green products and technologies. To achieve this objective, special initiative will be taken to promote development and manufacture of such products and technologies for exports. To begin with, focus would be on items relating to transportation, solar and wind power generation and other products as may be notified, which will be incentivized under Reward Schemes of Chapter 3 of FTP. 13

22 (xiii) Incentives for Exports from the North Eastern Region In order to give a fillip to exports of products from the north-eastern States, notified products of this region would be incentivized under Reward Schemes of Chapter 3 of FTP. 14

23 CHAPTER 1 C Board of Trade Board of Trade (BOT) 1C.1 BOT has a clear and dynamic role in advising government on relevant issues connected with Foreign Trade. Terms of Reference 1C.2 BOT has following terms of reference: I II III IV V VI To advise Government on Policy measures for preparation and implementation of both short and long term plans for increasing exports in the light of emerging national and international economic scenarios; To review export performance of various sectors, identify constraints and suggest industry specific measures to optimize export earnings; To examine existing institutional framework for imports and exports and suggest practical measures for further streamlining to achieve desired objectives; To review policy instruments and procedures for imports and exports and suggest steps to rationalize and channelize such schemes for optimum use; To examine issues which are considered relevant for promotion of India s foreign trade, and to strengthen international competitiveness of Indian goods and services; and To commission studies for furtherance of above objectives. Composition 1C.3 Commerce & Industry Minister will be the Chairman of the Board of Trade (BOT). Government shall also nominate upto 25 persons, of whom at least 10 will be experts in trade policy. In addition, Chairmen of recognized EPCs and President or Secretary-Generals of National Chambers of Commerce will be ex-officio members. BOT will meet at least once every quarter. 15

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25 CHAPTER 2 GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS Exports and Imports free unless regulated 2.1 Exports and Imports shall be free, except where regulated by FTP or any other law in force. The item wise export and import policy shall be, as specified in ITC (HS) notified by DGFT, as amended from time to time. Import of rough diamond from Cote d Ivoire shall be prohibited in compliance to Paragraph 6 of UN Security Council Resolution (UNSCR) 1643(2005). The import/export of rough diamond (HS Code , or ) from / to Venezuela shall be prohibited in view of voluntary separation of Venezuela from the Kimberley Process Certification Scheme (KPCS). No Kimberley Process Certificate shall be accepted / endorsed / issued for import and export of rough diamonds from / to Venezuela Import / export of arms and related material from / to Iraq shall be prohibited Direct or indirect export and import of following items, whether or not originating in Democratic People s Republic of Korea (DPRK), to / from, DPRK is prohibited: All items, materials equipment, goods and technology including as set out in lists in documents S/2006/814, S/2006/815 (including S/2009/205), S/2009/364 and S/2006/853 (United Nations Security Council Documents) INFCIRC/254/Rev.9/Part1a and INFCIRC/254/Rev.7/Part 2a (IAEA documents) which could contribute to DPRK s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes Direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute to Iran s enrichment-related, reprocessing or heavy water related activities, or to development of nuclear weapon delivery systems, as mentioned below, whether or not originating in Iran, to / from Iran is prohibited: i) items, listed in INFCIRC/254/Rev8/Part I in document S/2006/814, in Sections B.2 to B.7 as well as A.I and B.I except supply, sale or transfer of equipment covered by B.I when such equipment is for light water reactors and lowenriched uranium covered by A.1.2 when it is incorporated in assembled nuclear fuel elements for such reactors; 17

26 ii) items listed in S/2006/815 except supply sale or transfer of items covered by 19.A.3 of Category II. Above-mentioned UN Security Council documents are accessible from DGFT web site. Compliance with Laws 2.2 Every exporter or importer shall comply with the provisions of FT (D&R) Act, the Rules and Orders made thereunder, FTP and terms and conditions of any Authorisation granted to him. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless accompanied by Kimberley Process (KP) Certificate as specified by Gem & Jewellery EPC (GJEPC). Interpretation of Policy 2.3 If any question or doubt arises in respect of interpretation of any provision contained in FTP, or classification of any item in ITC (HS) or HBP v1 or HBP v2, or Schedule of DEPB Rates (including content, scope or issue of an authorization there under) said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding. Procedure 2.4 DGFT may, specify procedure to be followed for an exporter or importer or by any licensing or any other competent authority for purpose of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedures shall be published by means of a Public Notice, and may, in like manner, be amended from time to time. Exemption from Policy / Procedure 2.5 DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade. DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under: Sl.No. Description Committee ( i ) Fixation / modification of Norms Committee product norms under all schemes (ii) Nexus with Capital Goods (CG) and benefits under EPCG Schemes EPCG Committee (iii) All other issues Policy Relaxation Committee (PRC) 18

27 Principles of Restriction 2.6 DGFT may, through a notification, adopt and enforce any measure necessary for: - i ii iii iv v vi vii viii Protection of public morals. Protection of human, animal or plant life or health. Protection of patents, trademarks and copyrights and the prevention of deceptive practices. Prevention of use of prison labour. Protection of national treasures of artistic, historic or archaeological value. Conservation of exhaustible natural resources. Protection of trade of fissionable material or material from which they are derived; and Prevention of traffic in arms, ammunition and implements of war. Restricted Goods 2.7 Any goods, export or import of which is restricted under ITC(HS) may be exported or imported only in accordance with an Authorisation or in terms of a public notice issued in this regard. Terms and Conditions of a licence / Certificate / Permission / Authorisation Authorisation / Licence / Certificate / Permission not a Right 2.8 Every Authorisation shall be valid for prescribed period of validity and shall contain such terms and conditions as may be specified by RA which may include: (a) (b) (c) (d) (e) Quantity, description and value of goods; Actual User condition; Export obligation; Value addition to be achieved; and Minimum export / import price. 2.9 No person may claim an Authorization as a right and DGFT or RA shall have power to refuse to grant or renew the same in accordance with provisions of FT (D&R) Act, Rules made there under and FTP. Penalty 2.10 If an Authorisation holder violates any condition of such Authorisation or fails to fulfill export obligation, he shall be liable for action in accordance with FT (D&R) Act, the Rules and Orders made there under, FTP and any other law for time being in force. State Trading 2.11 Any goods, import or export of which is governed through exclusive or special privileges granted to STE(s), may be imported or exported by STE(s) as per conditions specified in ITC (HS). DGFT may, however, grant an Authorisation to 19

28 Importer-Exporter Code (IEC) Number Trade with Neighbouring Countries any other person to import or export any of these goods. Such STE(s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale in a non discriminatory manner and shall afford enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales No export or import shall be made by any person without an IEC number unless specifically exempted. An IEC number shall be granted on application by competent authority in accordance with procedure specified in HBP v DGFT may issue instructions or frame schemes as may be required to promote trade and strengthen economic ties with neighbouring countries. Transit Facility 2.14 Transit of goods through India from / or to countries adjacent to India shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with International Conventions. Trade with Russia under Debt-Repayment Agreement 2.15 In case of trade with Russia under Debt Repayment Agreement, DGFT may issue instructions or frame schemes as may be required, and anything contained in FTP, in so far as it is inconsistent with such instructions or schemes, shall not apply. Actual User Condition 2.16 Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, which are importable without any restriction, may be imported by any person. However, if such imports require an Authorisation, actual user alone may import such goods unless actual user condition is specifically dispensed with by RA. Second Hand Goods 2.17 All second hand goods, except second hand capital goods, shall be restricted for imports and may be imported only in accordance with provisions of FTP, ITC (HS), HBP v1, Public Notice or an Authorisation issued in this regard. Import of second hand capital goods, including refurbished / re-conditioned spares shall be allowed freely. However, second hand personal computers / laptops, photocopier machines, air conditioners, diesel generating sets will only be allowed against a licence. 20

29 Import of re-manufactured goods shall be allowed only against a licence. Scrap/Waste in SEZ 2.17A Any waste or scrap or remnant including any form of metallic waste & scrap generated during manufacturing or processing activities of an SEZ Unit/ Developer/Co-developer shall be allowed to be disposed in DTA freely subject to payment of applicable Customs Duty. Import of samples 2.18 Import of samples shall be governed by HBP v1. Import of Gifts 2.19 Import of gifts shall be permitted where such goods are otherwise freely importable under FTP. In other cases, a Customs Clearance Permit (CCP) shall be required from DGFT. Passenger Baggage 2.20 Bonafide household goods and personal effects may be imported as part of passenger baggage as per limits, terms and conditions thereof in Baggage Rules notified by Ministry of Finance. Samples of such items that are otherwise freely importable under FTP may also be imported as part of passenger baggage without an Authorisation. Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts, trimming and embellishments required for export, as part of their passenger baggage without an Authorisation. Import on Export basis 2.21 Freely exportable new or second hand capital goods, equipments, components, parts and accessories, containers meant for packing of goods for exports, jigs, fixtures, dies and moulds may be imported for export without an Authorisation on execution of LUT / BG with Customs Authorities. Re-import of goods repaired abroad Import of goods used in projects abroad 2.22 Capital goods, equipments, components, parts and accessories, whether imported or indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without an Authorisation After completion of projects abroad, project contractors may import, without an Authorisation used goods including capital goods provided they have been used for at least one year. Sale on High Seas 2.24 Sale of goods on high seas for import into India may be made subject to FTP or any other law in force. Import under Lease Financing Clearance of Goods from Customs 2.25 Permission of RA is not required for import of capital goods under lease financing Goods already imported / shipped / arrived, in advance, but not cleared from Customs may also be cleared against an Authorisation issued subsequently. 21

30 Execution of BG / LUT 2.27 Private / Public Bonded Warehouses for Imports Wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute prescribed LUT / BG / Bond with Customs Authority before clearance of goods. In case of indigenous sourcing, Authorisation holder shall furnish LUT / BG / Bond to RA concerned before sourcing material from indigenous supplier / nominated agency as prescribed in HBP v Private / Public bonded warehouses may be set up in DTA as per terms and conditions of notification issued by DoR. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such bonded warehouses. Such goods may be cleared for home consumption in accordance with provisions of FTP and against Authorisation, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods. If such goods are not cleared for home consumption within a period of one year or such extended period as the custom authorities may permit, importer of such goods shall re-export the goods. Free Exports 2.29 All goods may be exported without any restriction except to the extent that such exports are regulated by ITC (HS) or any other provision of FTP or any other law for the time being in force. DGFT may, however, specify through a public notice such terms and conditions according to which any goods, not included in ITC (HS), may be exported without an Authorisation. Export of Samples 2.30 Export of samples and Free of charge goods shall be governed by provisions given in HBP v1. Export of Passenger Baggage 2.31 Bonafide personal baggage may be exported either along with passenger or, if unaccompanied, within one year before or after passenger's departure from India. However, items mentioned as restricted in ITC (HS) shall require an Authorisation. Government of India officials proceeding abroad on official postings shall, however, be permitted to carry alongwith their personal baggage, food items (free, restricted or prohibited) strictly for their personal consumption. Export of Gifts 2.32 Goods, including edible items, of value not exceeding Rs.5,00,000 /- in a licensing year, may be exported as a gift. 22

31 However, items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift, without an Authorisation. Export of Spares 2.33 Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any other goods, (except those restricted under ITC (HS)) may be exported along with main equipment or subsequently but within contracted warranty period of such goods subject to approval of RBI. Third Party Exports 2.34 Third party exports, as defined in Chapter 9 shall be allowed under FTP. Export of Imported Goods 2.35 Goods imported, in accordance with FTP, may be exported in same or substantially the same form without an Authorisation provided that item to be imported or exported is not restricted for import or export in ITC (HS). Exports of such goods imported against payment in freely convertible currency would be permitted against payment in freely convertible currency Goods, including those mentioned as restricted for import (except prohibited items) may be imported under Customs Bond for export in freely convertible currency without an Authorisation provided that item is freely exportable without any conditionality / requirement of Licence / permission as may be required under ITC (HS) Schedule II A Hides, Skins and semi finished leather may be imported in the Public Bonded warehouse for the purpose of DTA sale and the unsold items thereof can be re-exported from such bonded warehouses at 50% of the applicable export duty. However, this facility shall not be allowed for import under Private Bonded warehouse. Export of Replacement Goods Export of Repaired Goods 2.37 Goods or parts thereof on being exported and found defective / damaged or otherwise unfit for use may be replaced free of charge by the exporter and such goods shall be allowed clearance by Customs authorities, provided that replacement goods are not mentioned as restricted items for exports in ITC (HS) Goods or parts, except restricted under ITC (HS) thereof, on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent reexport. Such goods shall be allowed clearance without an Authorisation and in accordance with customs notification. 23

32 Private Bonded Warehouses for Exports Denomination of Export Contracts 2.39 Private bonded warehouses exclusively for exports may be set up in DTA as per terms and conditions of notifications issued by DoR. Such warehouses shall be entitled to procure goods from domestic manufacturers without payment of duty. Supplies made by a domestic supplier to such notified warehouses shall be treated as physical exports provided payments are made in free foreign exchange All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realised in freely convertible currency. Realisation of Export Proceeds Free movement of export goods However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of ACU or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting the bank service charges) on account of this transaction would be taken as export realization under export promotion schemes of FTP. Contracts [for which payments are received through Asian Clearing Union (ACU)] shall be denominated in ACU Dollar. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and Invoices can be denominated in Indian rupees against EXIM Bank / Government of India line of credit If an exporter fails to realise export proceeds within time specified by RBI, he shall, without prejudice to any liability or penalty under any law in force, be liable to action in accordance with provisions of FT (D&R) Act, Rules and Orders made there under and FTP Consignments of items meant for exports shall not be withheld/ delayed for any reason by any agency of Central / State Government. In case of any doubt, authorities concerned may ask for an undertaking from exporter. No seizure of Stock No seizure of stock shall be made by any agency so as to disrupt manufacturing activity and delivery schedule of exports. In exceptional cases, concerned agency may seize the stock on basis of prima facie evidence. However, such seizure should be lifted within 7 days. Export Promotion Councils (EPC) 2.43 Basic objective of Export Promotion Councils (EPCs) is to promote and develop Indian exports. Each Council is responsible for promotion of a particular group of products, projects and services as given in HBP-v1. 24

33 Registration -cum- Membership Certificate (RCMC) 2.44 Any person, applying for: (i) an Authorisation to import / export, [except items listed as restricted items in ITC(HS)] or (ii) any other benefit or concession under FTP shall be required to furnish RCMC granted by competent authority in accordance with procedure specified in HBP-v1 unless specifically exempted under FTP. Trade Facilitation through EDI Initiatives DGCI&S Commercial Trade Data Fiscal Incentives to promote EDI Initiatives adoption Regularization of EO default and settlement of customs duty and interest through Settlement Commission Easing of Documentation Requirement Certificate of Registration as Exporter of Spices (CRES) issued by Spices Board shall be treated as Registration-Cum- Membership Certificate (RCMC) for the purposes under this Policy It is endeavor of Government to work towards greater simplification, standardization and harmonization of trade documents using international best practices. As a step in this direction, DGFT shall move towards an automated environment for electronic filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community partners including Customs and Banks To enable users to make commercial decisions in a more professional manner, DGCI&S trade data shall be made available with a minimum time lag in a query based structured format on a commercial criteria With a view to promote use of Information Technology, DGFT will provide fiscal incentives to user community. Deductions in Application Fee would be admissible for applications signed digitally or / and where application fee is paid electronically through EFT (Electronic Fund Transfer). Details are enumerated in HBP v With a view to providing assistance to firms who have defaulted under FTP for reasons beyond their control as also facilitating merger, acquisition and rehabilitation of sick units, it has been decided to empower Settlement Commission in Central Board of Excise and Customs to decide such cases also with effect from Pending finalisation of Single Common Document (SCD) for international trade, Government Departments dealing with exports and imports will honour Authorisation issued by other Government departments based on verification of export documents like shipping bill, bank realization certificate, packing list, bill of lading etc. and will not insist upon fresh submission of these documents. 25

34 Exemption / Remission of Service Tax in DTA Exemption from Service Tax in SEZ Exemption from Service Tax on Services received abroad 2.48 For all goods and services which are exported from units in DTA and units in EOU / EHTP / STP / BTP exemption / remission of service tax levied and related to exports, shall be allowed, as per prescribed procedure in Chapter 4 of HBP v Units in SEZ shall be exempted from service tax For all goods and services exported from India, services received / rendered abroad, where ever possible, shall be exempted from service tax. GRIEVANCE REDRESSAL DGFT as a facilitator of exports / imports 2.49 DGFT has a commitment to function as a facilitator of exports and imports. Focus is on good governance, which depends on clean, transparent and accountable delivery systems. Citizen s Charter DGFT has in place a Citizen s Charter, giving time schedules for providing services to clients, and details of grievance committees at different levels. Grievance Redressal Committee (GRC) In order to facilitate speedy redressal of grievances of trade and industry, a new grievance redressal mechanism has been put in place in the form of GRC by a Government Resolution. Export of perishable agricultural products The Government is committed to resolving all outstanding problems and disputes pertaining to past policy periods through GRC set up on , for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputes over entitlements, granting extensions for utilization of Authorisations To reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been introduced. The system will involve creation of multi-functional nodal agencies to be accredited by Agricultural and Processed Food Products Export Development Authority (APEDA), New Delhi. The detailed procedures have been notified at Appendix 40 to HBP v1. 26

35 CHAPTER 3 PROMOTIONAL MEASURES PROMOTIONAL MEASURES IN DEPARTMENT OF COMMERCE Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE) 3.1 Scheme for Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE) is formulated to involve the States in the export effort by providing assistance to the States Governments for creating appropriate infrastructure for the development and growth of exports. The Scheme is administered by Department of Commerce (DoC). The objective of scheme is to establish a mechanism for involving the State Governments to participate in funding of infrastructure critical for growth of exports by providing export performance linked financial assistance to them. The activities aimed at development of infrastructure for exports can be funded from the scheme provided such activities have overwhelming export content and their linkage with exports is full established. The specific purposes for which funds allocated under the Scheme can be sanctioned and utilized are as follows: Creation of new Export Promotion Industrial Parks/Zones (SEZs/Agri Business Zones) and augmenting facilities in the existing ones. Setting up of electronics and other related infrastructure in export conclave. Equity participation in infrastructure projects including the setting up of SEZs. Meeting requirements of capital outlay of EPIPs/EPZs/SEZs. Development of complementary infrastructure such as, roads connecting the production centres with the ports, setting up of Inland Container Depots and Container Freight Stations. 27

36 Stabilizing power supply through additional transformers and islanding of export production centre etc. Development of minor ports and jetties to serve export purpose. Assistance for setting up Common Effluent Treatment facilities and Any other activity as may be notified by DoC. Details of ASIDE Scheme are available at or Market Access Initiative (MAI) 3.2 Under MAI scheme, Financial assistance is provided for export promotion activities on focus country, focus product basis. Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Government, Indian Commercial Missions (ICMs) abroad and other national level institutions/eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others, i. Market studies/surveys, ii. Setting up of showroom / warehouse, iii. Participation in international trade fairs, iv. Displays in International departmental stores, v. Publicity campaigns, vi. Brand promotion, vii. Reimbursement of registration charges for pharmaceuticals and expenses for carrying out clinical trials etc., in fulfillment of statutory requirements in the buyer country, viii. Testing charges for engineering products abroad. ix. Assistance for contesting Anti Dumping litigations etc. Each of these export promotion activities can receive financial assistance from Government ranging from 25% to 100% of total cost depending upon activity and implementing agency. 28

37 Full text of guidelines is available at Marketing Development Assistance (MDA) 3.3 Under MDA Scheme, financial assistance is provided for a range of export promotion activities implemented by EPCs and Trade Promotion Organizations on the basis of approved annual action plans. The scheme is administered by DOC. Assistance includes, amongst others, participation in: i. Trade Fairs and Buyer Seller meets abroad or in India, and ii. Export promotions seminars. iii. Financial assistance with travel grant is available to exporters traveling to focus areas, viz., Latin America, Africa, CIS region, ASEAN countries, Australia and New Zealand. In other areas, financial assistance without travel grant is available. MDA assistance is available for exports having an annual export turnover as prescribed in MDA guidelines. Full text of guidelines is available at Meeting expenses for statutory compliances in buyer country for Trade Related Matters 3.4 DOC provides for reimbursement of charges/expenses for fulfilling statutory requirements in the buyer country, including registration charges for product registration for pharmaceuticals, bio-technology and agro-chemicals products on recommendation of EPCs. Financial assistance is also provided for contesting litigation(s) in the foreign country concerning restrictions/anti dumping duties etc on particular product(s) of Indian origin, as provided under the Market Access Initiative (MAI) Scheme of DOC. Towns of Export Excellence (TEE) 3.5 A number of towns have emerged as dynamic industrial clusters contributing handsomely to India s exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets. Selected towns producing goods of Rs. 750 Crore or more will be notified as TEE based on potential for growth in 29

38 exports. However for TEE in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs 150 Crores. (i) (ii) (iii) Recognized associations of units will be provided financial assistance under MAI scheme, on priority basis, for export promotion projects for marketing, capacity building and technological services. Common Service Providers in these areas shall be entitled for EPCG scheme. The projects received from TEEs shall be accorded priority by SLEPC for financial assistance under ASIDE. Notified Towns (TEEs) are listed in Appendix 7 of HBPv1. Brand Promotion and Quality 3.6 IBEF (originally called India Brand Equity Fund and later renamed as India Brand Equity Foundation) was set up by the Ministry of Commerce on 11 th July, 1996, with the primary objective to promote and create international awareness of the Made in India label in markets overseas. IBEF aims to promote India as a business opportunity by creating positive economic perceptions of India globally as well as effectively present the India business perspective and leverage business partnerships in a globalised market-place. DOC provides funds for capacity building for up-gradation of quality to national level Institutions and EPCs to organize training programmes for the skill improvement of the exporters for quality up-gradation, reduction in rejection, product improvement etc. as provided under the Market Access Initiative (MAI) Scheme of DOC. Test Houses 3.7 Central Government will assist in modernization and upgradation of test houses and laboratories to bring them at par with international standards. 30